Deloitte Accused of Overbilling a Federal Utility

Lucas Gilmore, “Big 4″ observer

November 22, 2010 /

Tennessee Valley Authority’s (TVA) Office of Inspector General accused accountants from Deloitte of grave misconduct with their contract to the federal utility after having found to have overbilled TVA.

Inspector General Richard Moore said Deloitte mismanaged the terms of its contracts with TVA when an audit conducted by his office showed that the $51.2 million of costs billed to TVA from 2003 to 2008 was $4.8 million above the reasonable cost. Moore said that the overbilling accounted for almost 10 percent of the bills which were not based on the provisions of the contracts.

Deloitte spokesman David Thompson said Deloitte has never veered from the terms and conditions stipulated in its contract with TVA and has always “immediately rectified any legitimate issues” that challenge the firm’s invoices.

Currently, TVA and Deloitte Consulting have combined efforts to completely ferret out the truth behind the findings of the audit, TVA spokesman Scott Brooks said. TVA will demand for a reimbursement from Deloitte if a deep investigation would show that the consulting firm has committed lapses in its performance of duty, Brooks added.

The TVA audit showed that Deloitte improperly billed TVA for unapproved works amounting to $514,669 and $51,233 for travel expenses that had no supporting documents. The inspector general also found out that another $108,877 was doubly billed to TVA.

Moore refused to disclose the whole audit of Deloitte’s work but a summary of which revealed a couple of things. First, the review shows that Deloitte tolerated overtime billings which have not been agreed upon in its proposal to TVA. It amounted to an overbilling of more than $3.3 million. Second, Deloitte billed more than $1 million to TVA for works that are well beyond the agreements in the contract.

TVA hired Deloitte to conduct independent studies and give advice related in computer services to proposed legislations. The projects were based in Knoxville and Chattanooga.